Thursday, July 22, 2010

The Land Development Bank Land Auction-'Only bigger farmers will face the stick'-TIMES OF INDIA

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'Only bigger farmers will face the stick'

Shishir Arya, TNN, Jul 23, 2010, 07.36am IST

NAGPUR: The Land Development Bank (LDB) will start auctioning off the land of farmers who have not been able to replay the loans taken before 1997. It is expected that thousands of farmers in the state will face action, with around 3,000 in distress-hit Vidarbha itself. According to a rough estimate by Vidarbha Jan Andolan Samiti, up to 50,000 acre land may have been mortgaged with LDB by the defaulting farmers of Vidarbha alone. Samiti president Kishore Tiwari claimed that the bank was now threatening to auction this land belonging to already distressed farmers.

However, government sources said that selling the land would be the last resort, with other options being exercised first. Farm activists have already begun opposing the move tooth and nail.

At the same time, those in the cooperation department, under which the LDB operates, say that most of the defaulters are big farmers, who owe amounts up to Rs 7 to 8 lakh. These loans were mainly taken for purchasing tractors, sinking borewells, levelling of land and other fixed assets. "There are hardly any small farmers on the list. It will be the bigger ones who will face the stick," said a senior official in the cooperation department.

Farmers' activists have said that LDB was not part of the loan waiver scheme, so farmers who took loans from there have not even got benefit of the waivers. However, LDB officials point out that all the loans being targeted now are term loans, and not farm loans, which were covered under the loan waivers.

LDB will begin by sending notices, after which it is hoped that farmers may come up with some amount, and ultimately save their land from being sold.

The LDB dues in Nagpur and Amravati divisions, which cover the entire Vidarbha region, come to around Rs 50 crore and Rs 13 crore respectively. Even though these loans were granted to buy other assets, the ultimate charge comes on the land holdings. Some of the assets were purchased in 1970s or 80s, so selling those assets will not realise much and the land will have to be auctioned, said a source.

"It was also seen that many farmers were wilfully defaulting, hoping for yet another round of waiver schemes. It was time some action was taken against them," said an officer involved in the bank's affairs.

LDB has a two-tier structure with an apex bank in Mumbai and offshoots in each district. The bank would avail finance from National Agriculture and Rural Development Bank (Nabard). On account of poor recovery, Nabard could not be repaid. The state government then provided funds to repay Nabard as well as for other purposes.

However, with defaults continuing, the bank owed a total Rs 1,200 crore to the state government, which has paid Nabard on behalf of LDB. The bank still owes the amount to the state government. It was on account of its inability to repay the state government's dues that it was decided to cease operations of the bank in 1997.

As per the recommendations of the Baidyanath Committee, the bank would be reimbursed half the amount, provided it generates the rest through recoveries. After this, there are chances that the activities of the bank may resume, which in turn will also benefit farmers, said a source